Macroeconomic Differences in Public and Private Union Density: An Analysis of U.S. State Economies

Louis J Pantuosco,Darrell Parker,Scott Lyman,William Seyfried

doi:10.52324/001c.8453

Abstract

In this paper, we investigate the macroeconomic impact on U.S. state economies of differences in the percent of the employed in private sector unions and the percent of the employed in public sector unions. Using annual data from 1983 through 1996 for the 48 contiguous U.S. states, we search for contrasting impacts of private and public sector union density on state economic conditions. Four individual equations are estimated, one for each economic measure: state unemployment rates, wage inflation, productivity growth, and GSP growth. Then, tests are conducted to determine the relative difference between private and public unions. Using a fixed effects model, in each equation we find significant differences between the effects of public and private union density on labor markets and economic growth. We conclude that disaggregating union data provides some insights toward the future as public unions expand to represent a larger percentage of total union membership.

Highlights

Over the past 25 years, there has been a growing disparity between the percentage of the workers unionized in the private sector and the percentage of workers unionized in the public sector
We investigate the macroeconomic impact of differences in the percent of the employed in private sector unions and the percent of the employed in public sector unions on U.S state economies
Over the sample period of 1983 to 1996, the empirical data in U.S states indicates that the unionized percentage of the employed in the private sector and the unionized percentage of the employed in the public sector have followed two distinct paths

Summary

INTRODUCTION

Over the past 25 years, there has been a growing disparity between the percentage of the workers unionized in the private sector and the percentage of workers unionized in the public sector. We search for contrasting impacts of private and public sector union density on state economic conditions, such as wages, growth, and unemployment. Public sector union density ranged from 73 percent in New York to 3.7 percent in South Carolina (see Figure 3). The underlying data indicate that private sector and public sector union membership within the individual states have yielded different trends. ~n,,.O,o, Year lStates with comparable levels of union density are grouped together for graph clarity in Figure 2 and Figure 3 These trends result from at least four differences between public and private sector unions. We estimate four individual equations to assess the impact of public and private sector union density on four economic measures: state unemployment rates, wage inflation, productivity growth, and GSP growth. We use the appropriate test to determine the relative difference between private and public unions

METHODOLOGY

MODEL AND EMPIRICAL RESULTS

Findings

CONCLUSION